Dear Prospective Applicant,
Pioneer Valley Habitat for Humanity is a non-profit, ecumenical housing ministry whose goal is to make home ownership possible for low-income families. We build in Hampshire and Franklin counties. Through the donation of money, land, expertise and labor, we commit ourselves to build safe, decent, affordable homes in partnership with families in need.
The steps of becoming a Partner Family and owning a Habitat Home is described in detail below. Please read this carefully to determine if you will likely qualify and if you would like to participate in our unique process to becoming a homeowner. The three eligibility criteria for becoming a Habitat Homeowner are ability to pay, willingness to partner and housing need.
Step One: Complete Application: The application is attached and you are required to complete each section and sign it. If a particular section does not apply to you, do not leave it blank. Write N/A in that section.
Step Two: Gather Supporting Documents: Along with your application, every adult in your household will be required to submit documentation for all forms of income including wages, social security and/or disability benefits, childcare payments, etc. In addition, any income from assets will also be reviewed so you will need to submit copy of bank statements for any investment accounts. See Attachment A for a complete list of required documents.
Step Three: Submit Application Package by February 22, 2017. All information is considered confidential and is to be used only for family selection.
Step Four: Application Review and Income Verification: The Family Selection Committee is responsible for reviewing each application and determining your eligibility. We build our homes for families earning less than 60% of area median income and we need to make sure you have the ability to pay the mortgage so the committee needs to carefully review your documents. Income limits are set by HUD each year and vary by family size. A list of the most recent limits can be found in Attachment B. The application review process may take several months to complete.
Step Five: Ability to Pay: Once it has been determined that you are qualified based upon your household income, the family selection committee then verifies that you have the ability to pay an affordable mortgage. This step seeks to answer 3 important questions:
1. Do you have enough income to support a modest home loan? The price of our homes typically ranges from $120,000 to $140,000 depending upon the cost to build them. You will need enough income to cover monthly housing costs that do not exceed 30% of your total income. Mortgage payments, taxes, homeowners insurance and condo/association fees (if applicable) are all considered part of your monthly housing costs. The initial total housing costs (as described above) when owning a Habitat home typically ranges from $700 - $1,100 monthly.
2. Can you demonstrate a positive repayment history? At this stage of the process, a credit check is performed to examine your history of repayment. We also request a statement of repayment from your current and previous landlord as well as other credit references.
3. Do you have too much debt to make mortgage payments? While Habitat homes are modestly priced, if your debt is too high it may affect your ability to make your mortgage payments on time. Your estimated monthly housing costs plus your monthly debt obligations cannot equal more than 40% of your income.
Step Six: Home Visit: Once your income eligibility and credit worthiness is determined, two members of the family selection committee will visit you and your family at home. At this time, the remaining Partner Family responsibilities and your housing need will be discussed in detail. In addition, the family selection committee will explain the details of the universal deed rider, the resale procedures and the capital improvement policy to which your home will be subjected. Finally, any responsibilities that you will assume if your home is part of a home owner association or condo association will be discussed during the home visit.
Step Seven: Lottery & Partnership: Habitat will put all eligible applicants into a lottery. If you are picked in the lottery you will be notified and asked to sign an agreement stating your willingness to partner with Habitat and sign a disclosure statement that you understand the resale restrictions associated with this opportunity. If selected, $700 will be needed for a down payment. You will have some time to save this money, as $100 installments for seven months do not begin until construction on the house begins. You will also need to save for homeowners insurance before you buy your home (typically $500 to $1,000).
Step Eight: Construction of your Home: Due to strong involvement of community volunteers, it takes approximately 12 to 24 months to complete construction on a Habitat Home. During this time, you will be required to perform a minimum of 250 hours of sweat equity per adult household member with the required total not to exceed 500. Many Partner Families perform more hours than required but this depends upon each family’s individual circumstances. A mentor will be assigned to you during this phase of the process and they will help you track your sweat equity hours, ensure that you meet the educational requirements and be on-hand to help select some of the custom elements available for your new home.
Step Nine: Purchasing Your Home: When construction is nearing completion, you will be required to sign a letter of intent to purchase your Habitat home. This document will establish the sales price as well as the day you may take possession of the home. The sales price is set based on the cost to construct the home. The letter will also outline several contingencies that need to be met before you can take possession of your home. These include:
1) Approval for USDA 502 Mortgage OR final income verification for Habitat mortgage
2) Proof of insurance for your new home (you will need to pay for a full year in advance of closing)
3) Certification of your sweat equity hours
4) Receipt of your down payment
5) Certification that you’ve completed educational requirements
6) Receipt of deed restriction disclosure statement
7) Receipt of warranty list and policy documentation
Step Ten: Closing Day: This is the day the title of house is signed over to you and when you sign the mortgage and loan documents. This is conducted in a lawyer’s office, and you will have an attorney represent you. The Massachusetts Department of Housing and Community Development (DHCD) must review all closing documents two weeks prior to closing and prepare a new deed rider. Prior to closing day, your mentor will sit down with you and review all the documents that you will be signing to determine if you have any questions. These include the promissory note and mortgage to Pioneer Valley Habitat for Humanity, a universal deed rider and re-sale price certification, a lease if on land trust property and any other mortgages that may be placed on the property by subsidizing agencies.
If you have any questions, please call the office at 413-586-5430 from 9:00 a.m. to 3:00pm, weekdays. Our website www.pvhabitat.org has detailed information on the “Home Ownership” link. Families not initially accepted may reapply for another house in the future.
Family Selection Committee, Pioneer Valley Habitat for Humanity